HOT cleared for IBC investment but hit with wholesale fine

HOT cleared for IBC investment but hit with wholesale fine

Israel’s Competition Commissioner has cleared a joint investment by Cellcom, Hot Telecommunication Systems and the Israel Infrastructure Fund (IIF) into Israel Broadband Company (IBC).

As reported by CommsUpdate, in September 2020 Cellcom and HOT confirmed that they had entered an investment transaction consisting of “several agreements”, including deals made through the IBC Partnership. Through this partnership, Cellcom and IIF jointly hold 70% of IBC’s share capital.

The transaction will see HOT become an equal member of the IBC Partnership “by making an investment substantially equal to the investment made by each of [Cellcom] and IIF until the closing date of the transaction.” This will confer on HOT an indirect 23.3% holding of IBC’s share capital.

For the deal to proceed, the investors are obliged to comply with various conditions and impending regulatory changes. Approval from the Ministry of Communications will also be required.

This week, the MoC fined HOT ILS6 million (US$1.8 million) for antitrust breaches relating to the country’s reform of the wholesale market.

A ministry statement asserted: “HOT Telecom’s conduct did not allow for normal wholesale market activity on its network, in a manner that, in effect, led to the exclusion of competitors from its network and to the deterrence of the development of competition.”

Although the ministry set regulated tariffs for wholesale services in 2017, it notes that HOT only fell in line with these restrictions the following year. Additionally, even after introducing the regulations, the MoC asserts that it detected “complications that did not enable service providers to provide proper services to consumers.”

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